Medicare Payment Policy under the Physician Fee Schedule for Calendar year 2005

• Medicare Payment Policy under the Physician Fee Schedule for Calendar year 2005
• Medicare Payment Policy under the Physician Fee Schedule for Calendar year 2005 Continued
• Medicare Hospital Outpatient Prospective Payment System (OPPS) Changes for CY2005
• Medicare Hospital Outpatient Prospective Payment System (OPPS) Changes for CY2005 Continued
• Revisions to the Physician Fee Schedule under Medicare Part B for Calendar Year 2005
• Revisions to the Physician Fee Schedule under Medicare Part B for Calendar Year 2005 Continued
• Revisions to the Physician Fee Schedule under Medicare Part B for Calendar Year 2005 Continued (2)
• Medicare Part A Pass-Through Payment Update CY2005

The Centers for Medicare and Medicaid Services (CMS) issued their final rule on November 2, 2004, as it pertains to changes to Medicare Part B payment policy. The final rule will be published in the Federal Register on November 15, 2004, with a comment period permitted up until January 15, 2005. Those who wish to comment on the final rule may do so electronically (www.cms.hhs.gov/regulations/ ecomments), or by mailing comments to: Department of Health and Human Services, Attention: CMS-1429-FC, P.O. Box 8012, Baltimore, MD 21244-8012.

On January 7, 2004, an interim final rule was published to implement provisions of the Medicare Modernization Act of 2003 (MMA) applicable in 2004 to Medicare payment for covered drugs and physician fee schedule services. These provisions included:

• Revising the current payment methodology for Medicare Part B covered drugs and biologicals that are not paid on a cost or prospective payment basis;
• Making changes to Medicare payment for furnishing or administering drugs and biologicals;
• Revising the geographic practice cost indices;
• Changing the physician fee schedule conversion factor;
• Extending the “opt-out” provision of section 1802(b)(5)(3) of the Act to dentists, podiatrists, and optometrists.

We will concentrate on the effect of the final ruling as it relates to recombinant and plasma-based therapies beginning in CY2005. As was expected, CMS issued information on the new average sales price (ASP) based payment rates under Medicare Part B. Beginning January 1, 2005, Part B covered drugs will be reimbursed based on 106% of the volume weighted average sales price (ASP), which will be calculated by CMS from data submitted by manufacturers. These payment rates will be updated on a quarterly basis. The ASP pricing data used to calculate the estimated payment rates in the final rule is from second-quarter 2004 data that was submitted by each manufacturer. CMS indicated in this ruling that they had just received third-quarter data and expect to calculate and publish a volume weighted ASP by therapeutic class in the upcoming weeks (third-quarter ASP submissions will reflect the actual first-quarter CY2005 Part B payment rates). The listing of drugs with their estimated 2005 payment rates can be obtained by clicking on the following website: www.cms.hhs.gov/providers/drugs/ default.asp.

The chart below represents reported rates for recombinant and plasma-based therapies:

Note: The following rates below represent the Wholesale Acquisition Cost (WAC) per therapeutic category. CMS did not receive CY2004 second-quarter ASP data for these categories:

Special Provision Blood Clotting Factors

Within the MMA of 2003, there is a provision for a separate payment to be made for the administrative costs associated with blood clotting factors. This provision was borne out of a study completed by the Government Accountability Office (GAO) in January, 2003 that estimated a separate payment of $0.03 - $0.08 per unit for administration of blood clotting factor. CMS proposed that beginning January 1, 2005, the separate payment would be equal to $0.05 per unit to hemophilia treatment centers (HTCs), homecare companies and other suppliers for the items and services associated with the furnishing of blood clotting factor. CMS received numerous comments based on their proposed ruling of $0.05 per unit from hemophilia treatment centers (HTCs), hemophilia coalitions, patient organizations and suppliers of clotting factors regarding additional data to be reviewed and the appropriateness of the proposed fee. Many of the commenters recommended that CMS incorporate cost information received from homecare providers as well as updated cost data from HTCs in order to determine a more accurate separate payment for the administration of blood clotting factor for CY2005. The commenters cited a survey of full-service hemophilia homecare companies that recommended a furnishing fee of $0.20 per unit.

Next: Medicare Payment Policy under the Physician Fee Schedule for Calendar year 2005 Continued

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